Whether an RIA is describing its investment strategy in advertisements or in the new Form ADV Part 2, it is important the firm articulates material risks faced by advisory clients and avoids language that might be construed as a guarantee.

The SEC crackdown, Robert Khuzami said, was akin to “the crime-fighting approach championed by Rudy Giuliani in 1990s New York–-if you stop people when they commit small infractions, they are less likely to graduate to bigger ones.”